Homeland Energy Group Ltd.

Homeland Energy Group Ltd.

March 19, 2008 02:00 ET

Homeland Energy Group Ltd. Receives Mining Licence for Kendal Coal Mine, South Africa

- Kendal processing plant scheduled for commissioning by end of Q1/08 - Mining contract to be finalized by mid-April 2008 - Anticipated mine-life at Kendal of +12 years

TORONTO, ONTARIO--(Marketwire - March 19, 2008) - Homeland Energy Group Ltd. (TSX:HEG) ('Homeland' or 'the Company') is pleased to announce that its subsidiary, Homeland Mining & Energy SA (Pty) Ltd., has received the Mining Licence for the Kendal Coal Mine in Witbank from the South Africa Department of Minerals and Energy (DME). Throughout the application process, Homeland has continued construction of the mine infrastructure and has been progressing on awarding of the mining contract through a tender process. Witbank is located approximately 100km east of Johannesburg, South Africa and the Kendal Mine is located approximately 2km northeast of the Kendal Power Plant.

"We are very pleased that the DME has granted our licence to begin mining the Kendal coal resource and would like to express our gratitude to the government officials and administrators who worked closely with us and who kept us informed as our application was moved through the process efficiently," commented Stephen Coates, President and CEO. "The Kendal licence is the second major milestone that Homeland has reached during the month, following the start of trading on the Toronto Stock Exchange on March 5, 2008."

Mining at Kendal is due to commence in the second quarter of 2008, following commissioning of the recently built on-site crushing and screening plants and the 200tph Parnaby Cyclones wash plant. Commissioning of the plants will take place using previously mined material, currently sitting in dumps on the Kendal mining site. This contract went out to tender in late December 2007, responses were received in late January and Homeland's operations team is in the final phase of negotiations with several of the interested parties. It is anticipated that the mining contract will be awarded in early April 2008.

With the processing facility on site, the Kendal Coal Mine has an opencast resource well situated in close proximity to South Africa's large industrial base in Johannesburg. Approximately 57 per cent of the production from Kendal will be sold into the lucrative domestic industrial markets with the remainder, largely a run-of-mine product, feeding the growing domestic electrical markets. Kendal is designed to handle approximately 6,000 tonnes per day, producing approximately 112,000 tonnes per month of saleable coal. An independent 43-101 compliant technical report was prepared by SRK Consulting of Johannesburg dated July 31, 2007 which may be found on SEDAR at www.sedar.com or in the project section of the Homeland Energy website at www.homelandenergygroup.com.

Operations Overview

Eloff Mining Project

The Kendal Coal Mine is the first, and smaller, of two projects that Homeland Energy is currently developing. The second is the Eloff Mining Project, located 10km south of the town of Delmas in Mpumalanga province of South Africa, 75km east of Johannesburg. This project, with an historically-calculated resource of 382 million tonnes of coal, holds the potential for largely opencast mining with the possibility of future underground mining and which could supply a low grade of coal to the South African power generating industry with the potential to upgrade for local industrial consumption or international export markets. This particular coal deposit could be ideal for power generation, coal-to-liquids and targeted export markets. The Company has filed for a Mining Licence for Eloff and additional resource definition, mine planning, environmental work are all underway.

Environmental Clean-up Projects - Northfield Slurry Dump

Homeland Energy is developing an additional group of environmental clean-up projects in southern Africa, the first of which, already in production, is the Northfield Slurry Dump located in South Africa, 220km southeast of Johannesburg. Work began in stockpiling of material for reprocessing of this previously-processed material following the granting of the permit by DME in December of 2007. It is anticipated that this dump will produce up to 300,000 tonnes per year to be used mainly for brick making and possibly for power generation.

Coal Exploration Projects

Prospecting licences have been granted to Homeland's local partners for another several coal exploration projects in South Africa and Homeland will continue to evaluate each of these projects for economic potential. In addition, Homeland is developing interests in coal projects in Swaziland - prospecting and mining licence applications submitted for an anthracite deposit at Mpaka Coal - and Botswana - five concessions with prospecting licences awarded to local partners.

Strategic Acquisitions

While Homeland Energy is focused primarily on the development of Kendal Mine and the Eloff Mining Project, the company's strategy also encompasses the evaluation of additional projects with a strategic fit with current operations. As such, Homeland Energy owns 39% of Homeland Uranium, with projects in Niger and the United States, and 15% of Altona Resources, currently developing a 7.8 billion tonne historic coal resource in South Australia.

Exploration and mine development programs are carried out under the supervision of Mr. Mike Nell, Chief Operating Officer, Homeland Energy Group Ltd. Mr. Nell, a professional mining engineer and "Qualified Person" as defined under National Instrument 43-101, has reviewed and verified the technical content of this press release.

Homeland Energy Group Ltd. is a public company trading on the Toronto Stock Exchange under the symbol "HEG" and is focused on energy exploration and development in Southern Africa. Homeland owns three advanced development/predevelopment coal projects in South Africa and a number of early-stage exploration properties in the provinces of Mpumalanga and Kwa-Zulu Natal. The Company is currently negotiating to acquire interests in a number of additional coal properties in eastern South Africa and neighbouring countries. Homeland is also a significant shareholder in Homeland Uranium Inc., a Canadian uranium exploration and development company focused on projects in Niger and the United States, and has a several other global strategic investments. Homeland Energy Group Ltd. began trading on the Toronto Stock Exchange on March 5, 2008 and has 145,001,117 shares outstanding.


This release contains certain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections. Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes "forward-looking statements". Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other ecological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward-looking statements.

The historical resource estimate of 382 million tonnes of coal for the Eloff Mining Project is based on data and reports prepared by previous operators and information provided by government ministries. The Company has not yet completed the work necessary to have the historical estimate verified by a QP. The company is not treating the estimate as a current NI 43-101 defined resource and the historical estimate should not be relied upon. The property will require additional exploration which the Company and its consultants intend to carry out in due course.

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